It is incorrect UI design and also broken. The user should not have to think about whether they want to switch windows or applications. They should simply be allowed to switch back to the previous window in which they were working, regardless of application.  In the words of Steve Krug, "Don't make me think".

The functionality of this shortcut is also broken in that the switcher should not include applications with no open windows. In the same way as Mission Control does not include applications with no open windows, so also Command + Tab should not switch into them. As a side note, Command + Tilde is NOT a viable alternative.  It still causes the user to have to think before switching.

This UI fix will bring great happiness to all those who have switched from other operating systems such as Windows or Linux. It will help you to retain more of those who switch, and it will increase the over-all happiness of the world.

At very least, make it a configurable option.